Case: – Bharti Airtel Ltd. v/s Jamshed Khan & Anr.; FAO (COMM) No. 55 of 2021
The Delhi High Court, in a recent judgment, clarified the scope of Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), stating that a court exercising powers under this section cannot entertain claims that were disallowed or rejected by the Arbitral Tribunal. The bench of Delhi High Court emphasized that Section 34 does not empower the court to rewrite an arbitral award; it can only set aside or uphold the award.
The case in question involved a License Agreement between Bharti Airtel Ltd. and Jamshed Khan. Disputes arose when Khan claimed that Airtel had abandoned the agreement by not paying the license fee. Arbitral proceedings followed, resulting in the arbitrator rejecting certain claims. The District Judge, under Section 34, partially set aside the award and allowed a portion of the respondent’s claim.
The appellant, Bharti Airtel Ltd., contested the decision, arguing that the court overstepped its bounds by rewriting the contract and altering executed agreements between the parties. The court, in its analysis, noted that the arbitrator rightly rejected the respondent’s claim as it depended on the validity of the license agreement, not the availability of space.
The High Court emphasized that while a court could partially set aside an arbitral award on a severable issue, it lacked the authority to modify the award by allowing a claim rejected by the arbitrator. Allowing such power would equate the court to an appellate authority, contrary to the legislative intent of Section 34.
In the above matter the Hon’ble High Court has observed as below: –
“53. In the decision of M. Hakeem (supra) the Apex Court reaffirmed that if one were to include the power to modify an Award under Section 34 of the Act, 1996, one would be crossing the Laxman Rekha as the Parliament clearly intended to confer no power of modification of an award under Section 34 of the Act, 1996. While entertaining appeals under Section 34 of the Act, 1996 the court is not actually sitting as a Court of appeal over the award of the Arbitral Tribunal and therefore, the court would not reappreciate or re-assess the evidence.

  1. It thus settled the law and held that the Court does not possess the power to modify an Arbitral Award while hearing a challenge under Section 34 of the Act.
  2. Accordingly, it is observed that the learned District Judge (Commercial Court) should have passed a decree for fresh arbitration proceedings to be instituted when it partially set aside the award instead of practically re-writing the Award itself”

Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate

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